Tax Planning with Losses #048

Host Damien Martin sits down with BKD’s James Anderson to cut through the complexities of the loss limitation rules to demonstrate why you need an understanding of both new and existing tax law to apply these rules after the Tax Cuts and Jobs Act (TCJA). Join Damien and James as they break down the hobby and passive activity loss rules, explain how these rules applied in a recent United States Tax Court case and discuss changes under the TCJA. TIMESTAMPS OF WHAT’S COVERED [01:06] Overview of the hobby loss rules [02:22] How hobby losses changed under the Tax Cuts and Jobs Act (TCJA) [03:50] Robison v. Commissioner, T.C. Memo. 2018-88 [05:39] Applying the nine tests under the hobby loss rules in Robison [08:13] Applying the hobby loss rules in real life [15:08] Tax basis and at-risk loss limitations [17:21] Overview of the passive activity loss rules and how they applied in Robison [23:24] What losing the case means for the taxpayers in Robison [25:40] The new excess business loss limitation under the TCJA [27:41] This was a relatively simple case [30:20] The TCJA layered on top of the existing tax law [34:00] Why tax accountants are popular at cocktail parties [35:52] James’ key takeaways from this case [38:37] Loss limitations and year-end planning BIO FOR GUEST James Anderson is a partner in BKD’s Lincoln, Nebraska practice and a member of the firm’s National Construction & Real Estate Group, National Manufacturing & Distribution Group and tax committee. James is experienced in providing corporate and individual taxation assistance to construction companies, financial institutions, manufacturers and retailers across the Midwest. He also consults with clients regarding accounting method changes, multistate taxation, choice-of-entity analyses, tax controversy support and business combinations. Connect with James on LinkedIn ADDITIONAL RESOURCES An Interview With David Kirk: Beware The New Excess Business Loss Limitation by Tony Nitti (Forbes) GET MORE “SIMPLY TAX” A complete archive of our episodes is available on our website and YouTube playlist. We’d love to hear from you! Email feedback and questions to [email protected]. Connect with Damien on social media! LinkedIn | Twitter | Instagram